Many would agree that 2024 has been a busy year so far in healthcare. The year kicked off with strong M&A activity in Q1, surpassing 2023 levels. The ongoing integration of revolutionary technologies like artificial intelligence has continued to shape the industry, and as we approach a Presidential election this fall, the potential ripple effects on healthcare are highly anticipated.

Despite facing lingering headwinds from regulatory pressures and elevated interest rates, there remains optimism and resilience surrounding healthcare in 2024 and beyond.

As we cross the halfway point of 2024, here’s a mid-year review of the key trends and developments that have shaped the healthcare sector and how that may unfold in the latter half.

Real Estate and Infrastructure

The healthcare real estate sector has adapted to the changing demands of the industry. The shift towards outpatient care and ambulatory services has driven the need for modern, flexible healthcare facilities.

There is a growing trend of repurposing existing spaces to accommodate outpatient services, reducing the reliance on traditional hospital settings. Over the next 10 years, surgical procedures are projected to grow by at least 25% at ASCs and 18% at both hospital outpatient departments and physician offices.

One significant challenge looms large amidst this evolution: aging facilities. These structures, once at the forefront of care provision, now present obstacles to delivering modern, efficient healthcare services and health systems that find themselves saddled with antiquated buildings needing reinvestment have a decision to make in terms of staying or finding a new facility.

Workforce Challenges Persist

The healthcare workforce continues to face challenges, with a notable shortage of healthcare professionals across various disciplines. NCHWA projects an overall shortage of 139,940 physicians and 337,970 registered nurses over the next 15 years.

This shortage has been exacerbated by the increased demand for healthcare services and the ongoing impact of the pandemic. According to KFF, if health sector employment had continued to grow at pre-pandemic rates, overall health sector employment would be 279,100 higher in February 2024.

In response, healthcare organizations are exploring innovative staffing solutions, including the use of telehealth to extend the reach of existing providers and investing in workforce development programs to train and retain healthcare professionals.

Healthcare M&A Activity

The first quarter of the year saw 20 transactions, representing the highest volume of dealmaking in the sector since 2020, reported Fierce Healthcare. Demand for GLP-1 drugs like Ozempic emerged as a game-changer, and led to significant M&A during the first half of 2024, including Roche’s acquisition of Carmot Therapeutics for $2.7 billion.  Q2 activity dipped from the bustling start of the year, seeing 11 transactions with a total transacted volume of $10.8 billion.

M&A will continue to unlock value and drive innovation across health industries as dealmakers gear up for a busy second half of 2024, per PwC.

Behavioral Health Demand

Demand for behavioral health services has increased dramatically over the past five years, accelerated by the COVID-19 pandemic. Mental health experts expect demand to rise further in the back half of 2024 in the months surrounding the election.

This growing demand has attracted significant investment interest in the behavioral health sector, drawing a diverse array of new investors who began acquiring provider practices and real estate. And as providers sought to expand or relocate to better serve their patients, real estate requirements also increased.

Through the first two quarters of the year there has been significant progress and transformation for the healthcare industry, and the second half of 2024 promises to be equally dynamic. With ongoing advancements and a steadfast commitment to improving patient care, the industry is well-positioned to tackle the challenges ahead and seize new opportunities.